Loading...

Clarity

Mark Fackrell

Boise, ID

I provide part time and interim CFO Services, I work with startups and established businesses. I am experienced in the high tech, manufacturing/development and construction industries.

I assist companies with establishing budgets, accounting and control systems, cash management, raising debt/equity financing. I work closely with bankers, CPA's, attorney's and shareholders on behalf of the business.

My primary goal is to help guide the business from a strategic and financial viewpoint. One of the key tools in this process is to help create useful information that business managers can evaluate business progress and project future results.

I have worked expensively in and with all aspects of business management including Operations, Sales, Project Management and Finance. I can communicate important business information to and between these various functions.

I have worked extensively with people who have a long history of being in business and people who are just starting out.

One of the considerations to answering this question is the business type, I mention this only because of the tax treatment of earnings. With an LLC or S Corp the owner pays taxes on the earnings of the business regardless of whether they are distributed or not whereas a C Corp pays its own taxes on earnings.

Having said that I think the best way to approach this is to set a goal of a fixed amount (and review that annually), in order to build that fixed amount up it usually a good idea to set aside a solid number like 10% or 20% of monthly earnings. I think it's also important to set this amount and be disciplined in funding it, rather than take the approach that you will just put whatever is left over at the end of the month, taking that approach often leads to nothing happening because people often find other things to spend the money on.

This is a tricky one. It is best to build a bottom up forecast. You need to internally decide your sales strategy and make your best estimate of how many customers you will sell, how much you will sell to them and how much repeat business you expect to have. You will do this for each market you will sell to. I would be as granular as possible when building this internal forecast. If you have specific target customers that is great include them. Combine all of this for the next 3 years and you have your forecast. It will be wrong by the way, but it's all you have to go on.

The real problem is when present this to investors. There is a tendency to give too many details and for some people to get caught up in the details. I would provide potential investors only the high level projections and explain the process you used to derive the numbers. Once you dive down into the details of a plan like this you are inviting all sorts of criticism that you really cannot defend, then it can turn into a game of gotcha.

Any good investor will know that the projections are wrong but should appreciate the process that you have used to create the projections. At the end of the day they will either think that what you have created is a good representations of your product/service potential or not. They will not benefit from getting too caught up in the detail and you certainly will not. Keep it simple and try to steer any conversations back up to the substance of the projection rather than the details.

The first thing you must do is determine if your good idea can translate into a good business. Who are the customers? How many of them are there? Are they willing to pay, and if so how much? How much does it cost to deliver the product or service? How much does it cost to market the product/service?

This can be done with a simple P&L, the first person you need to convince that this is a good business opportunity is yourself. That is usually not hard since it's your idea and you obviously think its a good one, but be critical of yourself. And once you have a basic plan ask some trusted people what they think, see if you can convince them that it is a good business potential.

After you have done this you can move on to other things like finding technical people and creating a business plan. A lot of the heavy lifting for the business plan will already be done based on what you did above.

I agree with Tom. You and your share will be diluted with added rounds of capital. New investors will likely require convertible preferred shares with additional voting and conversion rights. If you hold common this should not affect them at all.

If you hold preferred (which is not likely), they will simply require that you modify some of your rights so that they can get the deal they need. This can easily be accomplished by a good attorney.

Bottom line is that if the company is attractive to potential investors they will work current equity holders to get a deal done. All of the founders will be diluted with successive rounds of capital.

I would definitely only sell stock to accredited investors. I would also get a written document from the attesting to the fact that they are accredited (these forms should be available on the internet). Not aware of any minimum or maximum investment amount, but you need to file a Form D with the SEC, stating that you are doing a private offering that is exempt from normal SEC Reporting. You really should discuss this with a business attorney who does this type of work before you do anything.

As for pitfalls, be upfront with them and let them know that their investment will be at risk. Never EVER promise a sure thing. I would tell them that if they don't have "extra" money to invest that they should not do it. Make sure you have everything in writing and do the transaction with them just like you would do with someone you don't know.

If you treat is as a business transaction and are upfront about the risks you should avoid any problems.

It sounds like you are trying to protect your controlling interest in the company. If that is the case you will accomplish the same thing if you have 50% of voting shares or 50% of total shares. You are in the same position either way. It will take both of you to "do" anything with regards to corporate actions.

You obviously will only have half of the ownership though under the scenario you presented. So if you are OK with that I don't think you have much to worry about.

Generally the idea behind this type of strategy is that you want them to call you and have them help you to implement or design a specific plan.

In my business (which is also i consulting model), i take the approach that i will tell any clients or potential clients exactly what i plan to do, ie there is no "Secret Sauce".

The reality is that they either don't have the skill set or time required to perform the required tasks and will therefore retain my services to perform the work. This may not always turn into dollars but i think it usually does.

This transparency also builds trust with potential clients and lets them know that you are there to truly help them (and get paid), but not just looking for a quick one time "buck".

It really depends on what you want to do and where you want you business to end up.

It sounds like you would like to grow the business and have additional capital to do so. Just because he offered 60/40 with him in charge does not mean that is what it has to be. I would see how negotiable he is on that point and what his concerns are with you being in control.

I suspect that it has to do with how his dollars will be spent, which is understandable.

Just spit-balling here but maybe you could counter with something along these lines. Make a 51/49 split with you in control, but setup a "release schedule" in which he would have to approve specific investments before he gives you the cash.

There are a variety of other things you could do, this is just one idea. This way he had more control over what happens to the money and is not just giving you a "blank check", but you maintain control over the company.

This scenario requires you to establish a good financial reporting and forecasting process/system. But this is something you absolutely must do no matter how you proceed.

I agree with Jordan. I think the perspective that you are taking on this issue is not the best.

I do a lot of work with startups and i have run across the attitude many times where the founder is willing to dilute his or her ownership.

I guess the simplest analogy is this: is it better to have a small piece of something large, or 100% of nothing?

If the people that you have are integral to the success of the business and they are the "right" people for the job, give them a generous portion of the ownership, otherwise they will not be motivated to make the business successful.

This is one of those areas where you need to be very careful, because if they feel shortchanged you have given away ownership and not received equal value in exchange, this is a bad situation.

Reviews

Mark used simple words to clarify what a financial document I signed entitled. Due to the complexity of the document I kept contemplating its meaning and was relieved when I received consultation from Mark.

I have known Mark for quite some time. The thing that sets him apart is the rapport and trust he is able to build with his associates, peers and customers. Mark works tirelessly to ensure that the business needs are met or exceeded. He also has the expert ability to evaluate any business and determine the overall goals required to attain profitability and maintain it. Mark also performs at executive levels while maintaining fierce loyalty.

As the contract CFO of a pre-startup company, Mark has excelled in providing support, advice and (as needed) restraint. His participation is a significant part of the development and preparation for the future of the company. He is candid, straighforward and still easy to work with. His expertise and flexibility are ideal for new endeavors.

Mark is a rare commodity to any business, someone who knows how to add smart fiscal management analysis and balance that with sensible forecasting skills. He is quick to understand a business model and effectively communicate the necessary information for an organization to make sound financial and planning decisions.

He is smart and willing to do the extra work to make sure the job is well done. I would highly recommend Mark.

Mark served as an intern for the Boise Angel Fund during the 2009-2010 academic year. I was his supervisor.

I thoroughly enjoyed working with Mark. He worked on analysis of deals and the development of proforma financials for companies being considered for financing by the Boise Angel Fund.

I found Mark to be most competent and professional in his work. I understand he is offering his services as a part-time CFO for businesses who need a CFO but not full time. In my opinion he will be superb at this service.

I'd be delighted to discuss Mark with any business contemplating engaging him for such services.

It is with great pleasure that my partner, Tom Harrison, and I recommend Mark Fackrell for any position that requires the ability to create efficient and effective solutions to financial and/or cost/accounting functions.

Our Company, The Harrison Group, LLC, assists inventors and entrepreneurs in their search for the appropriate paths forward into the market place. Working with Mr. Fackrell in producing and implementing the financials for one of our clients’ Business Plans, competition at a major state-wide start-up event, and presentation to an Idaho-based angel fund was a truly enlightening and enjoyable experience for the entire team—not to mention winning the competition and going-forward interest from the Fund. Mark kept us focused on the goal at hand: to assemble the most realistic financial forecast for our client’s start-up company. The result was exceptional.

Mr. Fackrell’s competence in the financial field, his organizational and communication skills, sound judgment, integrity, reliability and analytical ability all came together in this project to a very successful outcome. We consistently tout Mark’s ability to have kept us focused and objective as we went through the many assumptions he “forced” upon us in producing the numerous financial documents needed in the process.

Again, we recommend Mark Fackrell very highly for any position he would seek.

I recently have had the opportunity to work with Mark on a strategic planning project. He brought value to the organization from a business management perspective as well as from a finalcial planning point of view. He developed a detailed financial plan that allowed a wide variety of "what if" scenarios. It was a positve and productive experience.

I've worked with Mark on two seperate projects in Boise. What he brings to the table is a vastly superior work ethic and a great deal of personal and professional integrity. Mark's accumen in finance and business management is on par with the top 1% of his industry. He's a five star guy who you'll be glad you engaged to help move your business forward.